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Willis Towers Watson Annual Report, Year Ended Dec 31, 2010

Filing Date
Filed February 28, 2011
Period End
December 31, 2010
Security
WTW
In the record · 2016–202610-K1210-Q338-K148

WTW filed 12 annual reports (10-K), 33 quarterly reports (10-Q) and 148 current reports (8-K) between 2016 and 2026.

  1. Material agreement8-K · May ’17May ’17
  2. Leadership change8-K · Mar ’20Mar ’20
  3. Leadership change8-K · Feb ’22Feb ’22
  4. Material agreement8-K · Jan ’26Jan ’26

01—Abstract

Summary

Summary of the 10-K filed February 28, 2011. Cited figures are marked; the original filing is the authoritative source.

Willis Group Holdings plc, now Willis Towers Watson, reported 2010 total revenues of $3,339 milliona, up from $3,263 million in 2009, with organic growth in commissions and fees of 4 percent offset by a 1 percent negative foreign currency translation impact.

Net income attributable to Willis Group Holdings was $455 millionb, or $2.66 per diluted share, compared with $438 million in 2009. Operating margin improved to 23 percent from 21 percent, driven by organic growth, cost discipline and a $18 million reduction in amortization of intangibles, partly offset by a $60 million increase in incentive expenses. Cash from operations was $489 million, and total debt declined to $2.3 billion from $2.4 billion.

Management highlighted the Willis Cause as its value proposition and announced a 2011 operational review expected to incur pre-tax charges of approximately $110 million to $130 millionc, with projected 2011 cost savings of $65 million to $80 million. The company expects modest adjusted margin expansion and modest adjusted diluted EPS growth in 2011, and significantly accelerated growth in 2012 and beyond. Investors should note ongoing regulatory and litigation matters, including the UK Financial Services Authority investigation, Stanford Financial Group-related lawsuits, and reinsurance market disputes, as well as the company's exposure to the soft market in North America and UK/Irish retail operations.

The company also disclosed that it is reviewing its debt profile and may redeem its $500 milliond 12.875% senior notes due 2016, which would result in an anticipated one-time pre-tax charge of approximately $180 million. The quarterly dividend remained at $0.26 per share, and no shares were repurchased in 2010 under the authorization of up to $925 million remaining.

02—Key points

Key Highlights

  1. Total revenues rose to $3,339 million in 2010 from $3,263 million in 2009, with organic growth in commissions and fees of 4 percent.
  2. Diluted earnings per share from continuing operations were $2.66 in 2010, compared with $2.58 in 2009.
  3. Operating margin improved to 23 percent in 2010 from 21 percent in 2009, reflecting organic growth and disciplined expense management.
  4. The company announced a 2011 operational review with anticipated pre-tax charges of $110 million to $130 million and expected 2011 cost savings of $65 million to $80 million.
  5. Total debt decreased to $2.3 billion at December 31, 2010 from $2.4 billion a year earlier, and cash from operations was $489 million.
  6. Possible redemption of the $500 million 12.875% senior notes due 2016 would trigger an estimated one-time pre-tax charge of approximately $180 million.
  7. Quarterly dividend remained at $0.26 per share, and the company declared a $0.26 dividend in February 2011.

03—One dollar

04—Financials

Financial Highlights

Figures from 10-KFY2010filed February 28, 2011
Revenue$3.33BNet Income$455.00M13.7% Net MarginEPS (Diluted)$2.66Total Assets$15.85BCash & Equivalents$316.00MFree Cash Flow$406.00M

Financial Statements

FY2010 against FY2009

Line itemFY2010FY2009Change
Revenue$3.33B$3.25B+2.4%
Operating Expenses$2.58B$2.56B+0.6%
Operating Income$753.00M$690.00M+9.1%
Interest Expense$166.00M$174.00M−4.6%
Net Income$455.00M$438.00M+3.9%
EPS (Basic)$2.68$2.61+2.7%
EPS (Diluted)$2.66$2.59+2.7%
Shares Outstanding (Basic)170.00M168.00M+1.2%
Shares Outstanding (Diluted)171.00M169.00M+1.2%

05—Questions

Frequently Asked Questions

  1. How did Willis perform financially in 2010?

    Total revenues were $3,339 million, up 2 percent from $3,263 million in 2009, driven by 4 percent organic growth in commissions and fees. Net income attributable to Willis Group Holdings was $455 million, compared with $438 million in 2009, and diluted EPS from continuing operations was $2.66.

  2. What is the outlook for 2011 and 2012?

    The company expects modest adjusted margin expansion and modest adjusted diluted EPS growth in 2011, and significantly accelerated adjusted margin and adjusted diluted EPS growth in 2012 and beyond, based on the 2011 operational review and continued investment.

  3. What are the main risks highlighted in the filing?

    Key risks include soft premium rates that reduce commission revenue, intense competition from Marsh & McLennan and Aon, regulatory and legal matters such as the UK FSA investigation and Stanford-related lawsuits, indebtedness and credit rating exposure, pension funding obligations, and foreign exchange exposure from London market operations where expenses are almost entirely in pounds sterling.

  4. How much debt does Willis carry and what are the refinancing plans?

    Total debt was $2.3 billion at December 31, 2010. The company is reviewing its debt profile and may redeem the $500 million 12.875% senior notes due 2016, which would result in an anticipated one-time pre-tax charge of approximately $180 million.

  5. Is Willis returning capital to shareholders?

    The company paid dividends of $0.26 per share quarterly, totaling $1.04 annually, and cash dividends paid were $176 million in 2010. No shares were repurchased in 2010, and $925 million remained under the buyback authorization.

06—Continue

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